Bargain Hunting Ends Tech Losing Streak as Dow Declines
Technology stocks rose Tuesday as investors snapped up bargains in the beleaguered sector, despite news of lackluster sales from Nokia, the world’s No. 1 maker of mobile phones.
The Nasdaq composite index closed up 45.38 points, or 1.9%, at 2,441.30, ending a three-session losing streak. Internet gear maker Cisco Systems, software giant Microsoft and telecommunications company Worldcom rose as investors bet on good long-term prospects for these high-tech bellwethers.
“Some tech stocks continue to be tough investments over a five- or six-month period,” said John Grib, managing director at Investment Counsellors of Bryn Mawr, Pa. “But over a five- or six-year period they are still going to be fine investments, especially at these levels.”
The Dow Jones industrial average fell 48.80 points, or 0.5%, to 10,572.55, after a short visit in positive territory. Weighing on it were energy, retailers and manufacturing issues, as money flowed out of “old- economy” shares into technology.
The broader Standard & Poor’s 500 index rose 4.94 points, or 0.4%, to 1,300.80.
Market analysts said they are looking for further interest rate cuts by the Federal Reserve, which last week cut rates by half a percentage point to keep the economy from sliding into recession.
“We’re having a constant battle here between folks who see the prospect of another climb out of this current economic trough and the continued lowering of expectations in corporate earnings,” said Richard Babson, chairman of Massachusetts-based Babson-United Invest Advisors, which manages $1.8 billion.
Among blue-chip stocks, DuPont slipped $1.88 to $46.44 after JP Morgan cut its investment rating on the chemicals giant. Consumer products company Procter & Gamble gave back some of this week’s gain, falling $1.94 to $74.63. Financials also fell, led by American Express, down $2 at $46.94.
After Nokia reported it sold fewer phones last year than expected, the Finnish company’s stock fell as much as 19%, closing down $3.81 at $39.31. Shares of other mobile phone companies also were battered.
However, Worldcom rose $1.63 to $19.81, and gains in other telecom companies, such as SBC Communications (up $1.81 to $51.94), Global Crossing (up $1.88 to $21.38), AT&T; (up $2.44 to $22.50) and QWest Communications (up $2.88 to $44.88), sent the S&P; telecom service providers index soaring nearly 10%.
Among Tuesday’s highlights:
* Internet names rose in the face of adversity. Yahoo gained $2.94 to $30.13, although investment house ABN Amro cut its rating on the stock, a day before the online media site is set to post its earnings.
Online retailer Amazon.com rose $1.44 to $16.38, although Credit Suisse First Boston slashed its 12-month price target for the stock and Goldman Sachs and Robertson Stephens cut their investment ratings.
* Biotechnology issues also recovered some of the ground lost in recent sessions. The Nasdaq biotech index rose 3%, reflecting gains by sector leaders such as Amgen, up $3.31 at $62. Biotech stocks tumbled more than 5% Monday after the CEO of Genentech, another big biotech company, questioned the near-term prospects for the stocks. Genentech shares rose $1.63 to $63.63 Tuesday.
* Shares of Charles Schwab, the No. 1 online broker, fell $1.38 to $27.56 after Morgan Stanley Dean Witter analyst Henry McVey lowered his rating on the stock, over concern that a slowing economy and two years of record growth make the stock less appealing.
The turmoil in the stock market, which has dampened trading activity among individual investors, has hurt Schwab and other brokerages that cater to small investors. Shares of E-Trade Group and Ameritrade Holdings are both down 63% over the last 12 months.
Reuters and Bloomberg News contributed to this report.
Market Roundup, C9, 10
